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AC Plan Gets Near Unanimous Creditor Support  
User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Posted (10 years 1 month 2 days 14 hours ago) and read 2230 times:


Air Canada Creditors Approve Plan of Arrangement by Overwhelming Majority
Canada NewsWire  
 
MONTREAL, Aug. 17 /CNW Telbec/ - Air Canada announced that its creditors today voted by an overwhelming margin to approve its Plan of Arrangement pursuant to its restructuring under CCAA.

At a Creditors Meeting held earlier in Montreal, the Resolution to approve the Plan was accepted by 99.6 per cent in number of Affected Unsecured Creditors representing 99.8 per cent, or $5.7 billion in value of the voting claims of creditors voting at the meeting.

"The strong support for Air Canada's Restructuring Plan received from creditors today is appreciated," said Robert Milton, President and CEO. "This positive response from creditors represents by far the most critical vote of confidence in the strength of our business plan and the airline's prospects going forward. With the creditors' overwhelming approval of the Plan, this crucial milestone of our restructuring is now behind us and we look forward to the Plan's approval by the court and the completion of our restructuring at the end of September."

The Corporation plans to emerge from CCAA protection on September 30, 2004 following a court sanction hearing scheduled for August 23, 2004.



23 replies: All unread, jump to last
 
User currently offlineOlympus69 From Canada, joined Jun 2002, 1737 posts, RR: 7
Reply 1, posted (10 years 1 month 2 days 13 hours ago) and read 2187 times:

Great news for Air Canada. I would assume that court approval is virtually assured now.

User currently offlineYyz717 From Canada, joined Sep 2001, 16248 posts, RR: 56
Reply 2, posted (10 years 1 month 2 days 13 hours ago) and read 2165 times:

Well, I would not call it "good news". I would just say it's not bad news.

AC remains with the same generally incompetent mgmt and militant work force, so this may be just a stay of execution rather than a new lease on life. WS & SG continue to have lower unit costs, whch is the true measure of AC's relative inefficiency.

The pressure is now on AC to put its words into action and become a viable & profitable carrier. With the same incompetent mgmt and militant unions, I'm not sure it can be done.







Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineAca330 From United States of America, joined Nov 1999, 146 posts, RR: 2
Reply 3, posted (10 years 1 month 2 days 13 hours ago) and read 2136 times:

I would call it excellent news with regards to their emergence from bankruptcy. Good luck Air Canada.

User currently offlineBmacleod From Canada, joined Aug 2001, 2275 posts, RR: 0
Reply 4, posted (10 years 1 month 2 days 13 hours ago) and read 2135 times:

What the creditors have given AC is a stay of execution. I now that sounds like a big stretch but looking at AC's current financial situation and a cloudy future, it's the best explanation at this point.


The engine is the heart of an airplane, but the pilot is its soul.
User currently offlineYyz717 From Canada, joined Sep 2001, 16248 posts, RR: 56
Reply 5, posted (10 years 1 month 2 days 13 hours ago) and read 2132 times:

I would call it excellent news with regards to their emergence from bankruptcy.

Exactly. It's merely the first step in a long slow road to recovery.

Akin to a terminally-ill cancer patient responding to drugs on their deathbed -- they remain alive but hardly healthy.





Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 6, posted (10 years 1 month 2 days 13 hours ago) and read 2117 times:

AC remains with the same generally incompetent mgmt and militant work force, so this may be just a stay of execution rather than a new lease on life. WS & SG continue to have lower unit costs, whch is the true measure of AC's relative inefficiency.


Air Canada's future performance hinges less and less on a domestic cost comparison. Considering that 70% of its revenues are international, all of its planned growth is international, a more relevant cost comparison is to AA, BA, Asian carriers and so on. Air Canada is lowering costs by one-third over the next year or two, and while its costs will not match those of WJ and SG, its revenue stream will continue to be richer. To talk only about costs and not take into consideration revenues is like presenting half a picture. It's meaningless. Profitability for airlines is about the excess of revenues over expenses, and so a higher cost airline can be profitable with the appropriate revenue stream. And of course, part of Air Canada's higher costs are associated with offering premium products like Executive Class and high frequency products like Rapidair that many business travellers will pay for. Just putting a few cheap flights into a market doesn't necessarily appeal to everybody, as Canjet and Westjet have found with their largely unsuccessful forays into the Montreal-Toronto-Ottawa triangle.



User currently offlineCaptainGomes From Canada, joined Feb 2001, 6413 posts, RR: 55
Reply 7, posted (10 years 1 month 2 days 12 hours ago) and read 2113 times:

I think this is excellent news myself. For the creditors to be that overwhelmingly supportive is testimony to the great work by Air Canada's management, whether they are incompetent or not. Air Canada will always feel the pressure of the increasingly strong LCC's, but in essence, they provide a different level of service that will always be sought after and necessary. This different level of service costs money, and no, I'm not talking about in-flight meals, I'm talking about access to the world through Star Alliance, I'm talking about generous rewards programs, and of course their impressive scheduling that really suits the business traveler.

Air Canada will command less market share, especially domestically. That is a given. But they will remain a powerful, and hopefully soon, a profitable service that Canada benefits from tremendously. Just like in other industries, the fact that there are lower cost alternatives does not mean more prestigious and higher-end products will automatically fail. GM Still sells Cadillacs, as well as Chevrolets. Holt Renfrew still exists, despite the increasing popularity of the Walmarts of the world. As such, Air Canada, British Airways, Air France, and the such, will always be important to many despite the influx of LCC's in the industry.



"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
User currently offlineYyz717 From Canada, joined Sep 2001, 16248 posts, RR: 56
Reply 8, posted (10 years 1 month 2 days 11 hours ago) and read 2074 times:

Considering that 70% of its revenues are international, all of its planned growth is international, a more relevant cost comparison is to AA, BA, Asian carriers and so on.

You had better add the LCC's to that mix. WS will jump into transborder en masse this fall and grow strongly, further eroding AC's yields and market.

Just putting a few cheap flights into a market doesn't necessarily appeal to everybody, as Canjet and Westjet have found with their largely unsuccessful forays into the Montreal-Toronto-Ottawa triangle.

How do you know WS is unsuccessful in this market?

For the creditors to be that overwhelmingly supportive is testimony to the great work by Air Canada's management, whether they are incompetent or not.

No, it's not. It's testimony to the fact that creditors will only gets cents on the dollar in the event of a liquidation. Nothing more.

Air Canada will always feel the pressure of the increasingly strong LCC's, but in essence, they provide a different level of service that will always be sought after and necessary.

Most travellers fly economy. AC's market share in economy is shrinking. There is no plan for AC to become an all F or B airline, so they remain under serious competitive attack. I think you are talking more from nostalgia than cold-headed analysis Nuno (no offense).  Smile









Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineCaptainGomes From Canada, joined Feb 2001, 6413 posts, RR: 55
Reply 9, posted (10 years 1 month 2 days 11 hours ago) and read 2059 times:

I think you are talking more from nostalgia than cold-headed analysis Nuno (no offense).

Neil, are you getting softer as time goes by?  Big grin

Of course Air Canada sells the majority of its seats in Y, but passengers will pay a premium, or choose Air Canada if it means greater choice of schedules, greater rewards program, and better inflight service. Also the fact that they can fly Y to virtually anywhere worldwide on an Air Canada ticket, is a huge bonus.



"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
User currently offlineAirbusfanYYZ From Canada, joined Oct 2002, 1434 posts, RR: 25
Reply 10, posted (10 years 1 month 2 days 9 hours ago) and read 2028 times:

Until and unless WS and Jetsgo offer a full service product they are not going to get my business unless it's for pleasure on one of those rock bottom fares. As Nuno has accurately pointed out, Big grin there are many of us still flying who like to be served a meal, have a lounge to relax in, etc. etc.

Let the masses have the LCCs.  Big grin

Cheers,
Kaz



t.dot photography
User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 11, posted (10 years 1 month 2 days 8 hours ago) and read 2009 times:

Most travellers fly economy. AC's market share in economy is shrinking. There is no plan for AC to become an all F or B airline, so they remain under serious competitive attack. I think you are talking more from nostalgia than cold-headed analysis Nuno (no offense).  


Actually, AC's market share was declining, but it's domestic market does not appear to be shrinking. It's domestic trafffic is rising, at it has an 80% domestic load factor right now, actually higher that Westjet.

It is possible that lower fares are stimulative, and that a recovering economy is stimulative, because there are more people flying this year domestically.

In fact, in recent months AC's market share appears to have stabilized and its domestic traffic is growing in the aggregate despite the expansion of the LCCs. At this point in time, the statistics do not support your argument.

Just putting a few cheap flights into a market doesn't necessarily appeal to everybody, as Canjet and Westjet have found with their largely unsuccessful forays into the Montreal-Toronto-Ottawa triangle. How do you know WS is unsuccessful in this market?


I know from my AC sources that AC remains very successful in this market

I know from my own flying experiences and other of others I network with that WJ has difficulties on many these routes, but especially Montreal-Toronto.

I know it from the considerable availability of the very lowest priced fares on Westjet when AC has sold out a plane departing at the same time and at a range of fares averaging out much higher than that super-low WJ fare. I know it from the number of passengers who have bought Latitude Passes, which is proving to be an excellent retention mechanism for the high yield passengers. I know from the fact Canjet is dropping off the Montreal-Hamilton route on Sept 15.

I also know that AC is the only airline reining in capacity this winter while the LCCs are all adding aircraft, throwing them into routes and situations that are further and further away from their core competences. Air Canada is well armed with excellent retention mechanisms and now a great deal of cash with which to sustain itself for years. These other airlines will have to scrounge the business with non-compensatory fares. If they can't take it off AC, where will it come from?

If fuel was cheap, it might not be such a problem, but when they are flying 30 passengers around in a 180-seat jet in January, this is going to be a huge problem. I predict at least one LCC will fail in the next 12 months.





User currently offlineYyz717 From Canada, joined Sep 2001, 16248 posts, RR: 56
Reply 12, posted (10 years 1 month 2 days 8 hours ago) and read 1997 times:

I know from my AC sources that AC remains very successful in this market


Define "very successful". AC remains the market leader in YYZ-YOW/YUL but must be feeling pain from the new entrants.

I know from my own flying experiences and other of others I network with that WJ has difficulties on many these routes, but especially Montreal-Toronto.

Anecdotal. Not much value. WS's breakeven load factor is less than AC's anyway.

I know it from the number of passengers who have bought Latitude Passes, which is proving to be an excellent retention mechanism for the high yield passengers.

Anecdotal again. Also preliminary as SG/WJ have only competed in this market for 4 mos.

I know from the fact Canjet is dropping off the Montreal-Hamilton route on Sept 15.

This route is being tfred from YUL to YOW so Canjet capacity remains the same on the eastern triangle.

I also know that AC is the only airline reining in capacity this winter

Their YTD capacity is up YOY.

while the LCCs are all adding aircraft, throwing them into routes and situations that are further and further away from their core competences.

The LCC's core competencies are flying from A to B, whether A and B are YYC, YEG or YYZ and LAX.

Air Canada is well armed with ...a great deal of cash with which to sustain itself for years.

Just like WS. WS also has capable mgmt and lower unit costs. Advantage to WS.












Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 13, posted (10 years 1 month 2 days 7 hours ago) and read 1959 times:

Let's deal in facts, not supposition. Westjet is cutting back Toronto-Montreal to three flights a day next month. Canjet is cutting out its only Hamilton-Montreal flight. With Jetsgo, Canjet and Westjet all competing on Toronto-Ottawa, none will do well, and Rapidair goes up the middle against with the premium product and high frequency. It's really no contest.




User currently offlineYyz717 From Canada, joined Sep 2001, 16248 posts, RR: 56
Reply 14, posted (10 years 1 month 1 day 16 hours ago) and read 1870 times:

Let's deal in facts, not supposition.......With Jetsgo, Canjet and Westjet all competing on Toronto-Ottawa, none will do well, and Rapidair goes up the middle against with the premium product and high frequency. It's really no contest.

That's not fact! That IS supposition!

Jetsgo, Canjet & Westjet all have lower costs than AC so can sustain lower fares better than AC, who has never had real competition in this market (their largest btw) until 2004. AC will suffer trememdously from this competitive onslaught.








Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineCaptainGomes From Canada, joined Feb 2001, 6413 posts, RR: 55
Reply 15, posted (10 years 1 month 1 day 16 hours ago) and read 1858 times:

Jetsgo, Canjet & Westjet all have lower costs than AC so can sustain lower fares better than AC, who has never had real competition in this market (their largest btw) until 2004. AC will suffer trememdously from this competitive onslaught.


That is true Neil. However, you are missing a few important issues, and I am perplexed as to why you fail to omit them. One is that, if one airline is selling 50 seats on an aircraft at low prices, and there are another 70 or so seats that aren't sold on the same aircraft, then the revenue generated is not enough to cover the costs. If Air Canada is selling some premium seats, plus some cheaper seats, but overall is selling 80% or more of the seats on the aircraft, then it will be in far better shape.

Yes, Westjet, Canjet and Jetsgo have lower operating costs, and can therefore make money selling cheaper tickets. But if these LCC's aren't selling enough seats to cover costs, then it's a moot point. What it does is put a downward pressure on Air Canada fares, and yes that will affect their profitability. It is obvious if others are scaling back and internal sources claim their loads are very low, while Air Canada's are very high, then obviously Air Canada must be doing far better in that market.



"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
User currently offlineRobsawatsky From Canada, joined Dec 2003, 597 posts, RR: 0
Reply 16, posted (10 years 1 month 1 day 13 hours ago) and read 1793 times:

If anyone gets credit for AC coming out of CCAA it should be:

1. Creditors, for accepting what is still going to be high risk equity for debt, which won't likely recover their amounts owed for years if at all.
2. Employees, for agreeing to substantial wage cuts, which was really the only sensible choice they had.
3. New investors, Deutsche Bank, GE Capital Corp, and others for ensuring new capital was and will be available to continue operations, again at substantial risk.
4. Executive management and their advisors may have come up with a plan to save the airline but don't get much credit because they risked nothing except pride at a personal level.


User currently offlineCanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4
Reply 17, posted (10 years 1 month 3 hours ago) and read 1723 times:

Jetsgo, Canjet & Westjet all have lower costs than AC so can sustain lower fares better than AC, who has never had real competition in this market (their largest btw) until 2004. AC will suffer trememdously from this competitive onslaught.

Let's not forget that Air Canada flies internationally and can thereby subsidize its domestic routes through its international ops.



EH.
User currently offlineLymanm From Canada, joined Jan 2001, 1138 posts, RR: 1
Reply 18, posted (10 years 1 month 2 hours ago) and read 1704 times:

"Jetsgo, Canjet & Westjet all have lower costs than AC so can sustain lower fares better than AC, who has never had real competition in this market (their largest btw) until 2004. AC will suffer trememdously from this competitive onslaught."

Didn't Shuttle by CanadiAC in the triangle? Royal? C3? Canjet tried, but smartly pulled out. Based on the "success" of those three in the triangle market, I think predicting doom and gloom on the shuttle routes for AC is historically inaccurate.

A sidenote, though - it is a huge market. I calculate approximately 10,000+ seats a day between YYZ & YUL.



buhh bye
User currently offlineCrj 900 From Canada, joined Mar 2001, 594 posts, RR: 1
Reply 19, posted (10 years 4 weeks 1 day 16 hours ago) and read 1665 times:

Sorry YYZ717, AC is not gonna suffer on the triangle...... we're filling A330s and 767s, not to mention a big handful of Airbuses on YZ-UL, WJ can't even fill a measly 737 and Jetsgo, well my buddy uses them and there's rarely a flight that's half full. I worked for CP and although we were well established in the market, we had no where near the loyalty on that run that AC commands. Don't forget that CP pulled most of the large a/c off the run and had F28s doing hourly and 737s or 320s during the rush hour...luckily for us we made it work and we were full service, the LCCs are not gonna fill 10 md-80s a day with bargain flyers going to see granny and the odd businessman and be profitable.

User currently offlineCanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4
Reply 20, posted (10 years 4 weeks 1 day 14 hours ago) and read 1641 times:

I agree that Air Canada is doing just fine in the triangle. That Lattitude Pass thingy did a good job locking up the business customers. While we (WS) are starting to fill our planes, I doubt that we're making any money judging by the ticket prices ($39). What I could see happening is either we stick it out as is with our 3x YYZYOW and 5x YYZYUL for the time being, or we pull out (which I highly doubt) and re-enter when we start operating our -600's. I don't know how Jetsgo is doing, but I hear they aren't doing any better than we are and they have double the flights on aircraft with 24 more seats.

I have a feeling that Jetsgo's next expansion will be right into Westjet's territory - the western triangle. They've already announced 3x daily YVRYEGYYZ service, and I can see YVRYYC coming next. As I've said before, Air Canada will be around for a while, and the battle now is between Jetsgo and Westjet.

(As a sidenote: LiveTV has been operating on tail 010 for a few months now and it is being very well recieved. The next few aircraft are to have LiveTV installed right after the long weekend and we'll have 26 LiveTV aircraft in operation by January 1, 2005)



EH.
User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 21, posted (10 years 4 weeks 1 day 14 hours ago) and read 1643 times:

What I could see happening is either we stick it out as is with our 3x YYZYOW and 5x YYZYUL for the time being, or we pull out (which I highly doubt) and re-enter when we start operating our -600's.



Judging by the Westjet Website, it's the opposite. It looks like YYZ-YUL is being cut back to three flights a day while YYZ-YOW is back to five flights. Complicating matters, Canjet is bumping YHM-YOW up to five flights, but dropping YHM-YUL. So the Ottawa market is going to be fought over tooth and nail, while it looks like YYZ-YUL will be an AC-Jetsgo dual. My guess is Jetsgo will go to an all-F100 service on YUL - Leblanc had one when he started Intair - but AC is in the drivers' seat on that route for sure.


User currently offlineFLYYUL From Italy, joined Jun 2000, 4980 posts, RR: 51
Reply 22, posted (10 years 4 weeks 1 day 10 hours ago) and read 1607 times:

Sebring,

Where do you see WestJet cutting YULYYZ down to 3... I see them expanding to 6 up from 5.



User currently offlineCanadaEH From Canada, joined Jul 2003, 1341 posts, RR: 4
Reply 23, posted (10 years 4 weeks 1 day 6 hours ago) and read 1567 times:

Our winter schedule will be out in September, but as of this moment it looks as though we're going back to six daily YYZYUL and eight daily YYZYOW flights.


EH.
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